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Reg CC Changes Ushering in Better, Smarter Approaches to RDC Risk Management

Thursday, June 21, 2018 ( / Patti Murphy)

A webinar, presented by and sponsored by Ensenta explores what financial institutions can and are doing in the run up to new regulatory language that assigns responsibility for protecting against duplicate deposit activitity.
Changes to Federal Reserve Regulation CC that assign responsibilities for duplicate check deposits should be prompting financial institutions to take concrete steps to protect against duplicates. They need to be updating RDC solutions, operational procedures and customer agreements. And they should be educating customers on how to properly endorse RDC items. These are key takeaways from a new webinar, Smarter and Safer Strategies for Adjusting to the Upcoming Reg CC Changes, presented on June 19 and available for viewing now at
Reg CC – the Federal Reserve ruleset governing check collections and funds availability – was amended last year to incorporate an indemnity provision specific to RDC. Beginning July 1, the regulation stipulates that an FI accepting an RDC item indemnify any FI that subsequently receives that item as a paper check deposit against losses arising from the fact that the item has already been paid. The indemnity doesn’t’ apply, however, if the paper check contains a restrictive endorsement, such as “for mobile deposit to Bank A.”
A survey of FIs, undertaken by in April, found fewer than 4 in 10 are making changes to their RDC programs in anticipation of the new regulatory language. Just 20% reported having automated ways of inspecting or validating endorsements. “I think those numbers are going to change, particularly as more FIs come to understand why they can and should make changes,” said John Leekley, Founder and CEO of
Among those FIs considering changes to limit exposure to duplicate deposits, 55% are updating customer agreements to require restrictive endorsements, Leekley noted during the webinar.
One FI that has been making changes to its RDC program in anticipation of the new Reg CC language is Hawaii Federal Credit Union (HSFCU). Headquartered in Honolulu, HSFCU is Hawaii’s largest credit union with $1.3 billion in assets and about 77,000 members. Enid Peris, Assistant Vice President, Operations & Support Services, explained during the webinar how HSFCU has leveraged RDC technology enhancements and education to limit exposure to duplicate deposit losses.
HSFCU relies on restrictive endorsement recognition functionality built into its RDC solution, along with a multi-pronged approach to educating staff and members on restrictive endorsements. “Our focus has been on educating members on the proper usage of mobile RDC and ensuring they have the best possible experience,” Peris said. It seems to be working. In May, just 7% of members’ mobile deposit items were rejected for lacking the proper restrictive endorsement, Peris said.
“This is an excellent example of balancing the customer experience against the need for risk mitigation and doing so with efficiency,” said Xan Kasprzak, Vice President of Risk Management & Client Relations at Ensenta Corporation, which sponsored the webinar.
Kasprzak described what Ensenta is doing to support recognition of specific restrictive endorsements, such as “for mobile deposit only” with notable success rates. “We’re certainly working on it and making that functionality available to our customers,” she said.
Matt Kriegsfeld, Senior Manager, Mobile Payment & Document Solutions, Mitek Systems, also addressed the webinar. He shared data suggesting that over a third of consumers who do not use mobile RDC cite concerns about mistakes as a reason. He said this creates an “opportunity” for FIs to reach out and educate customers and create a positive view of mRDC. “We think it’s something we all need to tackle together: to deliver a consistent experience and consistent message to customers around restrictive endorsements and why it’s important to use them,” Kriegsfeld said.
Kriegsfeld also described steps Mitek is taking to improve the underlying recognition technologies that support mRDC solution sets, such as its recent acquisition of A2iA, which specializes in cursive and block print handwritten text recognition. “Handwritten text recognition is a challenge,” Kriegsfeld said. “What we continue to do is invest in ways to mitigate the risk,” he added. The latest in artificial intelligence is among some of the cutting-edge technologies being applied to these challenges to improve recognition rates and increase deposit acceptance, all the while better managing risk and improving the customer experience.
Smarter and Safer Strategies for Adjusting to the Upcoming Reg CC Changes is available for viewing free and on demand at Click here now to view this important and timely webinar.


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